How Swiss insurers are responding to financial crime

The insurance industry faces growing risks from financial crime. Addressing crime effectively is not just a compliance problem, it is also essential to achieving sustainable growth and competitiveness over the longer term. Discover the findings from our survey with Swiss life insurers where we gathered insights into Financial Crime (FC) prevention and how their organisations are tackling the pervasive threat of financial crime.

Regulatory pressure is a catalyst for change

The rapidly evolving regulatory landscape and increased regulatory scrutiny are mounting pressure on insurers, who must simultaneously innovate to enhance customer experience, efficiency, and cost management. Regulatory requirements are the primary drivers of change, prompting insurers to leverage abundant data and emerging technologies to tackle financial crime risks. As these risks become increasingly complex and unpredictable, insurers must adopt a more agile and proactive approach, integrating high-quality data and advanced technology into their business models.

Life insurance is a prime target for financial crime

While insurers may face less exposure to money laundering compared to banks, life insurance products are particularly vulnerable and demand focused attention. This is compounded by the varied regulatory compliance requirements across jurisdictions, which often exceed minimum standards. Survey respondents have also identified the difficulty in changing internal procedures to comply with the latest 2024 EU Anti-Money Laundering (AML) package as a significant hurdle.

Navigating the cost of financial crime prevention

The largest contributors to cost were seen to be outdated IT systems and employee costs associated with manual operational processes resulting in repetitive tasks. Frequent regulatory changes further strain outdated IT systems, necessitating costly workarounds that increase employee workload. Insufficient governance and accountability also generated duplicated efforts and delayed decision-making. All this further complicates cost-efficient risk management.

Artificial Intelligence (AI) will transform Anti-Financial Crime (AFC)

Despite these challenges, AI and particularly Generative AI (Gen AI) remains underutilised for FC prevention, with 83% of respondents not using it. The potential of AI is significant, with investments projected to grow from £35 billion in 2023 to £97 billion annually by 2027. The respondents largely recognise AI's importance, with half strongly agreeing it will play a key role in FC prevention. AI is expected to enhance dynamic risk management, automated data enrichment, narrative generation for case notes, and intelligent alert prioritisation, leading to improved operational efficiency and data integration.

Tackling the risk of AI

AI presents risks such as data privacy, bias, model risk, cybersecurity, and concentration risk, as highlighted by the International Association of Insurance Supervisors (IAIS). To mitigate these risks, organisations should develop a comprehensive strategy with a top-down mandate, focusing on high-impact, low-barrier use cases. Implementing repeatable processes and clear governance will standardise operations and ensure stakeholder accountability. Engaging employees through documented responsibilities and process changes will foster awareness and alignment for scaling and value creation. Prioritising flexible IT architecture and aligning data capabilities with the AI strategy will ensure quality and accessibility.

How Deloitte can help

Balancing financial crime prevention and regulatory compliance with innovation to stay competitive is challenging. Deloitte can assist you in integrating advanced technology into your financial crime prevention efforts. By aligning FC-specific use cases with your organisation's strategic innovation goals, we can enhance cost efficiency, improve user experience, and strengthen the capabilities of your AFC function.